Annual Customs, Excise and Service Tax Case Digest: CESTAT Rulings 2025 (Part 10)
This article summarises all CESTAT orders published in the Taxscan.in. CESTAT quashes Excise Duty Demand, Rules Job Work Valuation Must Exclude Principal’s Consumption M/s. Smith Enterprises vs Commissioner of GST and Central Excise 2025 TAXSCAN (CESTAT) 551 The appellant, Smith Enterprises, Puducherry, manufactured HDPE plastic caps on a job work...
This article summarises all CESTAT orders published in the Taxscan.in.
CESTAT quashes Excise Duty Demand, Rules Job Work Valuation Must Exclude Principal’s Consumption
The appellant, Smith Enterprises, Puducherry, manufactured HDPE plastic caps on a job work basis using raw materials supplied by Marico Ltd. After surpassing the SSI exemption threshold in September 2013, the appellant continued paying excise duty based on the transaction value comprising raw material cost and conversion charges.
The Bench, comprising Judicial Member Ajayan T.V. and Technical Member Vasa Seshagiri Rao, found that the department’s invocation of Rule 8 was not sustainable. It held that Marico Ltd.’s consumption of the caps did not constitute consumption “on behalf of” the appellant, which is the threshold under Rule 8.
The Tribunal concluded that the impugned orders lacked legal sustainability and allowed the appeals with consequential relief. The decision was pronounced on 8 January 2025.
CESTAT Rules Reusable Packaging Not 'Tangible Goods Service': Volvo Logistics Case Decided
M/s. Rolltec Engineering vs The Commissioner of GST &Central Excise 2025 TAXSCAN (CESTAT) 552
The appellant, Rolltec Engineering, a 100% Export Oriented Unit of Brakes India Ltd., had entered into an arrangement with Volvo Logistics for the supply of reusable V-Emb packaging material such as wooden pallets, frames, lids, and plastic containers. These containers were provided on a stock hire basis, and the appellant was allowed to use the material free of charge for three weeks, after which rental charges would apply.
The Tribunal, however, found that the data system merely provided logistical information and did not amount to Volvo retaining effective control or possession. Once the packaging material was delivered to the appellant, the latter was free to use it for transporting goods as deemed fit, without any restriction on its mode of use. The appellant was also liable for any damage to the material, further indicating possession and control.
Excise Duty Not Leviable on Imported Edible Lactose Cleared Without Manufacture: CESTAT Sets Aside Duty Demand
Rajasthan Antibiotics Ltd..appellant-assessee,was engaged in manufacturing pharmaceutical products and was registered with the Central Excise department. It paid Central Excise duty and availed CENVAT credit on inputs and input services.
The two member bench comprising Justice Dilip Gupta(President) and P.V.Subba Rao(Technical Member) heard both sides and reviewed the records.The main issue was whether the assessee had to pay CENVAT duty on edible lactose. As per Section 3 of the Central Excise Act, duty applies only to goods that are manufactured or produced in India.
The assessee had imported edible lactose, taken credit of the duty paid, sent some of it for processing to a job worker, and later cleared the remaining quantity after reversing the credit. In an earlier round, the tribunal had asked the Commissioner to check if the lactose was imported.
No Service Tax on Section 194J Income Below ₹10 Lakh Threshold Under Exemption Notification: CESTAT
Baakir Real Estate Private Limited, the appellant, had received Rs. 91,177 in FY 2016-17 and Rs. 2,19,099 in FY 2017-18 under Section 194J. The department alleged that these were payments for taxable services and issued a show cause notice raising a service tax demand. The Commissioner of Central Goods and Services Tax, Delhi South, confirmed the demand along with interest and penalties, invoking the extended period of limitation under Section 73(1) of the Finance Act, 1994.
The two-member bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) observed that not all income subject to TDS under Section 194J automatically attracts service tax liability. It emphasized that even if the amount was taxable, the receipts fell within the threshold exemption limit for small service providers under Notification No. 33/2012.
The tribunal held that the Commissioner’s reliance on the absence of explanation was insufficient to override the statutory exemption. It clarified that the threshold exemption applies to aggregate taxable services in a financial year, and in this case, the amounts were significantly below the Rs. 10 lakh cap.
Suspension of Customs Broker Licence Without Valid Grounds: CESTAT Sets Aside Suspension, Restores Licence
Silverline Global Freight Pvt Ltd,appellant-assessee,submitted that the suspension had affected its business and employees. It argued that no reason was given for the immediate suspension and there was no proof of mis-declaration or overvaluation of goods. It also said the order did not mention any specific rule under Customs Broker Licensing Regulations(CBLR), 2018 that was violated.
The two member bench comprising Justice Dilip Gupta(President) and P.V.Subba Rao(Technical Member) looked into the submissions and records but did not examine the merits of the allegations, as the inquiry report and the Commissioner’s final order were still pending. It only considered whether the suspension confirmation was justified.
The appellate tribunal found that the claim about no reason being given for the immediate suspension was incorrect. The Suspension Order dated 9.1.2025 clearly mentioned that the appellant had violated CBLR, 2018 provisions, and continuing its operations could harm the interest of the department, which required immediate action.
Inclusion of Outward Freight in Assessable Value: CESTAT Allows CENVAT Credit Citing FOR Sale Basis
Montage Enterprises Pvt Ltd vs Commissioner of Central Exciseand Service Tax 2025 TAXSCAN (CESTAT) 556
Montage Enterprises Pvt Ltd,appellant-assessee, manufactured Printed Plastic Laminates under the Central Excise Tariff Act, 1985. They claimed benefits under Notification No. 56/2002-CE. Two show cause notices were issued for the periods March to May 2008 and December 2008 to March 2009.
The appellate tribunal found that the assessee sold goods on an FOR basis and included freight in the assessable value, which the department disputed. The CESTAT held that this issue was already settled by the Larger Bench of the Tribunal in M/s Ramco Cements Limited and by the Himachal Pradesh High Court in M/s Inox Air Products Pvt Ltd.
The appellate tribunal also noted Supreme Court decisions that gave statutory status to Board instructions for uniform assessment practices. It observed that earlier cases involving FOR contracts supported this position and that similar pleas were accepted in related cases, including one involving the assessee.
No Evidence Linking IT Disclosure to Taxable Services: CESTAT sets aside Service Tax Demand Based on Assumptions
Coming to the facts of the present case, a Show Cause Notice was issued on 1-11- 2017, proposing the recovery of service tax amounting to Rs. 4,09,89,255, including Rs. 74,16,000 on the Rs. 6 crore disclosed as miscellaneous income during an IT survey. The department alleged that this income was earned by the respondent as a real estate agent, rendering taxable services under the Finance Act, 1994.
CESTAT, comprising Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) upheld the original order and dismissed the department's appeal. The bench concluded that the demand of Rs. 74,16,000 was unsustainable, as there was no evidence to prove that the Rs. 6 crore disclosed income was linked to real estate agent services or any other taxable activity.
‘Extended Limitation Period Invalid without Deliberate Suppression by Manufacturer’: CESTAT sets aside Service Tax Demand
Coming to the facts of the present case, the appellant, M/s Jainco Enterprises, has a service tax registration for providing Commercial or Industrial Construction Service, Works Contract Service, and Construction of Residential Complex Service. During the audit, it was observed that the appellant had provided Works Contract Service to M/s Kota Thermal Power Station, Kota (KTPS).
The bench further noted, "If the department had full knowledge or the manufacturer had reasonable belief that he was not requested to give particular information, only the normal period of limitation, only 1 year, is applicable.”
CESTAT Upholds Rejection of Refund Claim as Time-Barred, Dismisses Appeal Citing Binding Limitation Under S.102
The assessee has made an application for a refund of service tax paid on government construction work during the period from April 2015 to December 2015. He based his claim on Section 102 of the Finance Act, which provided retrospective exemption from service tax for such services and allowed refunds for taxes already paid.
The tribunal relied on the Madhya Pradesh High Court’s decision in MDP Infra (India) Pvt Ltd. vs. Commissioner of Customs, Central Excise & CGST, which had similarly upheld the strict application of the six-month limitation. The Supreme Court had later dismissed an appeal against this decision, reinforcing its validity.
The tribunal, comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Member Technical), concluded that the Commissioner (Appeals) had correctly rejected the assessee’s claim as time-barred. The bench dismissed the assessee’s appeal.
CESTAT Holds Agricultural Warehousing and Allied Services as Tax-Exempt Composite Activity
M/s. Shree RamAgro Services vs Commissioner of Central GST andCentral Excise 2025 TAXSCAN (CESTAT) 560
The appellant, M/s Shree RamAgro Services, is engaged in providing taxable services such as Renting of Immovable Property Service, Business Auxiliary Service, and Cargo Handling Service.
The bench observed that the cleaning and grading were done for a few agricultural products stored by the appellant, and since this didn’t change the nature of the products, it’s seen as part of agricultural activity, which is exempt from service tax.
The tribunal noted that cleaning, grading, handling, and transporting the agricultural produce are all part of one combined service. As clarified by the TRU on 28.02.2006, when services are bundled like this, they should be treated as a single service based on the main activity, and what really matters is the main purpose of the service, not how the charges are split.
Importer Brought Restricted Insecticides Unknowingly: CESTAT Allows Re-Export Citing Goods Not Prohibited
M/s Best Crop Science Pvt. Ltd. vs Principal Commissioner ofCustoms (Import) 2025 TAXSCAN (CESTAT) 561
Best Crop Science Pvt. Ltd., the appellant, imported a consignment declared as “3-Chloro-4-(1,1,2-Trifluoro-2-(Trifluoromethoxy)Ethoxy)Benzenamine” under a Bill of Entry dated 12.08.2024. Upon examination, the Directorate of Revenue Intelligence (DRI) found that the goods actually contained "Novaluron", a restricted insecticide under the Insecticides Act, for which the appellant did not possess the mandatory registration certificate. The consignment was detained, and later seized by DRI.
The two-member Judicial Member P.K. Choudhary observed that the appellant had quickly raised concerns with the supplier, sought re-export before receiving chemical analysis results, and did not benefit from the mistaken import.
The tribunal explained that since the goods were restricted and not inherently dangerous or prohibited, and as the mistake was admitted by the supplier, confiscation was not justified. The tribunal held that allowing re-export caused no harm to national interest and upheld the appellant’s plea.
20-Day Delay in Review Order Cannot be Excused Without Board Extension or Condonation: CESTAT Dismisses Dept’s Appeal against Nippon
Nippon Thermostat Co. Pvt. Ltd, the assessee, imported materials from its related company, Nippon Thermostat Company Japan. The Order-in-Original accepted the declared transaction value for a period, but the Reviewing Authority directed the department to appeal to the Commissioner (Appeals) of this order for a proper examination.
The Tribunal considered the department's reliance on the Supreme Court's decision in CCE v. KAP Cones (2017). The Apex Court, interpreting a similar Section 35E(3) of the Central Excise Act, 1944, held that the Board can extend the review order timeline by 30 days with sufficient cause, negating the need for delay condonation if such an extension is granted.
However, the Tribunal noted that in the present case, no evidence was produced to show that the appellant had submitted any application to the Board seeking an extension of time, nor was any such extension order issued by the Board. The tribunal also observed that the appellant did not file any condonation application for the delay.
CESTAT Upholds Service Tax Exemption for PGCIL Projects; Department's Appeal Beyond SCN Dismissed
Commissioner of Service Tax vs M/s Navnirman ConstructionCompany 2025 TAXSCAN (CESTAT) 563
In this case, the department is on appeal. The assessee respondent was engaged in providing construction services for constructing commercial/industrial buildings or civil structures, providing works contract services, supply of tangible goods services, etc.
The tribunal observed that the adjudicating authority had rightly relied on Notification No. 11/2010-ST dated 27.02.2010, which states that service provided in relation to transmission of electricity stands exempted from the whole of the service tax.
The bench noted that there was no evidence brought by the department to prove that the service provided by the appellant is not for electricity transmission infrastructure.
Difference between the financial statement and ER-1 returns, insufficient to prove alleged clandestine removal: CESTAT
M/s. Indore Composite Pvt. Ltd. vs Commissioner of CGST &Central Excise 2025 TAXSCAN (CESTAT) 564Coming to the facts of the present case, the appellant, M/s. Indore Composite Pvt. Ltd. is engaged in the manufacturing of FRP rods for optical fibre cable and was availing the benefit of Cenvat Credit on inputs, input services and capital goods under Cenvat Credit Rules, 2004.
The CESTAT noted that the department has failed to prove the allegations of clandestine removal of goods. The bench observed that the allegation of clandestine removal would not be sustained by just noting the difference in the balance sheet with ER-1.
Dr. Rachna Gupta (Judicial Member) ruled in favour of the assessee and set aside the impugned order.
CESTAT Finds No Actual Transfer of EOU Machinery, Reduces ₹9.04 Lakh Duty Demand to ₹3.98 Lakh
In September 2010, Central Excise officers visited the premises and found that the appellant had wrongly availed CENVAT credit of ₹36.13 lakh on capital goods used for job work. The credit was reversed immediately. It was also found that some machines meant for the EOU unit were uninstalled and transferred to other units. A cheque of ₹6.71 lakh was submitted, followed by a letter stating the credit was admissible and would be contested.
The two-member bench comprising P.K. Choudhary (Judicial Member) and P. Anjani Kumar (Technical Member) heard both sides and reviewed the records. The customs duty demand of Rs. 9,04,380/- was based on the claim that machines imported for a 100% EOU unit were transferred to other units.
The bench found that the machines were still on the EOU premises and the transfer claim was not supported. The statement saying machines were transferred was rejected because the panchnama was considered more reliable.
Customs Officers Cannot Alter FOB Value as It Reflects Buyer-Seller Agreement: CESTAT
M/S MAHAJAN FABRICS PRIVATE LIMITED vs PRINCIPALCOMMISSIONER/COMMISSIONER OF CUSTOMSMahajan Fabrics Private Limited,appellant-assessee,filed a shipping bill on 22.12.2018 at ICD Tughlakabad to export 598 cartons of readymade garments. The declared FOB value was Rs. 4.25 crore, with claims for drawback of Rs. 10.63 lakh and ROSL of Rs. 5.07 lakh.
The main issue was whether the Commissioner (Appeals) was correct in upholding the Additional Commissioner’s order that re-determined the FOB value of the export goods under Rule 6 of the Valuation Rules and Section 14 of the Customs Act, 1962. It also considered if the Commissioner (Appeals) rightly upheld that drawback and ROSL should be paid on the value determined by the Additional Commissioner, and whether the confiscation, redemption fine, and penalty were justified.
The tribunal referred to a recent decision in Customs Appeal No. 50127 of 2024, which clarified that FOB value means the transaction value agreed upon by the buyer and seller for export goods. Customs officers had no power to alter this FOB value because it represented the contract price.
Extended Period Wrongly Invoked for Misclassification and Undervaluation: CESTAT Sets Aside Demand Citing Full Disclosure
M/s Mishrambu Beverages Pvt. Ltd. vs Commissioner of CentralExcise & Service Tax 2025 TAXSCAN (CESTAT) 567
Mishrambu Beverages Pvt. Ltd.,appellant-assessee,manufactured and cleared dry fruit sharbats, drinks, syrups, and squashes. It paid duty at 2% under Section 4 of the Central Excise Act by classifying the goods under tariff item 2106 9011 and claimed SSI exemption.
The two member bench comprising P.K.Choudhary(Judicial Member) and P.Anjani Kumar(Technical Member) examined whether the extended period of limitation was properly applied. The original order said the assessee suppressed facts and evaded duty by not submitting a price list and wrongly claiming SSI exemption despite high turnover.
The tribunal disagreed. It found the assessee had disclosed the goods’ nature, classification, and ingredients when registering and filed returns showing clearances and exemption claims. The department knew this and did not object in the first audit.
Value of Imported Goods Cannot Be Enhanced Solely Based on DRI Alert: CESTAT
Garg Impex,appellant-assessee,was engaged in importing and trading Polyester Knitted Fabric from China. The assessee imported several consignments and filed Bills of Entry, declaring the value based on commercial invoices and submitting all required documents. On examination, the goods matched the declarations.
The two member bench comprising S.S.Garg(Judicial Member) and P.Anjani Kumar(Technical Member) reviewed the arguments and documents from both sides and focused on the issue of whether the value of the imported goods could be increased based on the DRI alert.
The appellate tribunal noted that previous decisions by various benches had clearly held that the declared value could not be raised just because of a DRI alert. It referred to earlier rulings in the assessees’ own cases and similar cases where the tribunal set aside orders that increased value based on the DRI alert.
Sub-contractor of Works Contract was also exempt from Service Tax if main contractor was exempt from it: CESTAT Sets aside Demand of Service Tax
M/s AECS Engineering and Geotechnical Services Pvt. Ltd. vsPrincipal Commissioner of Central Goods & Services Tax 2025 TAXSCAN (CESTAT) 569
M/s AECS Engineering and Geotechnical Services Pvt. Ltd., the Appellant, challenged the Order-in-Original passed by the Ld. Principal Commissioner, CGST Noida. The Appellant was registered with Service Tax Department vide registration No. AAICA3141RSD001 under the Finance Act, 1994 for providing and receiving taxable services.
The bench found that the SCN was issued based on third party information received from the Income Tax Department. The value shown in TDS statement, i.e. Form 26AS was considered as Taxable Value and Service Tax was demanded @14.50% for the F.Y. 2015-16 & 15% for the F.Y. 2016-17 without any investigation to identify the nature of services and the manner of determination of value to charge service tax. During adjudication proceedings, the Appellant submitted that he had provided services under Works Contract and Engineering Consultancy during the F.Y. 2015-16 & 2016-17.
A two member bench of P.K. Choudhary, Member (Judicial) and P. Anjani Kumar, Member (Technical) observed that as per clause (h) of Sl.No.29 of the said Notification, sub-contractor of Works Contract was also exempt from Service Tax if main contractor was exempt from Service Tax. Thus, the demand of Rs.2,18,195/- is liable to be dropped. The Service Tax payable during 2016-17 is Rs.1,09,50,292/- (Rs.1,11,68,487/Rs.2,18,195/-).
Booking cancellation charges are compensation, No Service tax Demandable: CESTAT
M/s Nimbus Motors Pvt. Ltd. vs Commissioner of Central Goods& Services Tax 2025 TAXSCAN (CESTAT) 570
M/s Nimbus Motors Pvt. Ltd.,the Appellant was registered with Service Tax Department vide registration No. AAACN3829ST001 for providing “Business Auxiliary Services”, Repair/Reconditioning, Restoration or Decoration or any other similar Services of Motor Vehicles. The Appellant was appointed as an authorized dealer of M/s Hyundai Motors India Ltd.
A two member bench of P.K. Choudhary, Member (Judicial) and P. Anjani Kumar, Member (Technical) observed that, based on booking of cars, the Appellant placed orders with HMI to manufacture/supply the cars, but on account of cancellation, there was some kind of loss to the dealer and to compensate the same, cancellation charges were collected. There is no service element in such a transaction. The amount collected towards cancellation charges does not represent “consideration” received on account of provision of any service. The Appellant entered into a contract with its customers where customers pledged to buy a car.
CESTAT quashes Excise Demand, Rules CENVAT Credit Restrictions Unconstitutional
The appellant, Astalife, a manufacturer of P&P Medicaments, had availed CENVAT credit on inputs, capital goods, and input services. The Department initiated action after finding that Astalife had defaulted on duty payments from April 2011 to January 2013 and continued such defaults beyond thirty days.
The Tribunal noted that the sole issue for consideration was the sustainability of demands made for violation of Rule 8(3A). The appellant's advocate, K.V. Subramanian, argued that the condition in Rule 8(3A) requiring payment of duty "without utilizing the cenvat credit" had been declared unconstitutional by the Gujarat High Court in the case of Indsur Global Ltd v Union of India (2014). He also highlighted that the Madras High Court in Malladi Drugs & Pharmaceuticals Ltd. v. Union of India (2015) had concurred with this view. These decisions, he submitted, were followed by the Tribunal's own bench in previous orders.
The bench, comprising M. Ajit Kumar, Member (Technical), and Ajayan T.V., Member (Judicial), found that the issue is settled in favor of the assessee due to various High Courts holding Rule 8(3A) as ultra vires of Article 14 of the Constitution.
CESTAT Overturns CENVAT Denial, Rules 11 Input Services Eligible Despite Department's Objections
M/s. Cetex Petrochemicals Limited vs The Commissioner of CGST& Central Excise 2025 TAXSCAN (CESTAT) 572
Cetex Petrochemicals, a manufacturer of Methyl Ethyl Ketone (MEK) and Secondary Butyl Alcohol (SBA), had availed CENVAT credit on various input services during February and March 2013. The department disallowed the credit, alleging that these services were not used in or related to manufacturing. However, CESTAT scrutinized each service and found the denial unjustified.
The Tribunal clarified that the definition of "input service" under Rule 2(l) of the CENVAT Credit Rules is wide and includes services used directly or indirectly in manufacturing. It noted that the department failed to disprove Cetex’s claims with evidence. For instance, commercial or industrial construction services were linked to plant maintenance and storage tanks, critical for handling inflammable products. Similarly, management and repair services were engaged for specialized machinery like mechanical seals, which in-house staff couldn’t handle.
The CESTAT Bench comprising Ajayan T.V (Judicial Member) and Vasa Seshagiri Rao (Technical Member), emphasized that the department’s blanket denial lacked merit. It modified the original order, allowing credit on the 11 services and waiving penalties, while directing interest payment only if the reversed credit was utilized. The ruling underscores the importance of evidence-based adjudication in tax disputes.
No Service Tax Payable on Student Recruitment Services Rendered to Foreign Universities: CESTAT
On an investigation by the Directorate General of Excise and Intelligence (DGCEI), it was found that the appellant/assessee, TC Global India Pvt. Ltd, were not paying service tax on commission received by them from foreign universities/institutes for arranging and facilitating provision of Student Recruitment Services to be provided in India to various foreign universities/institutes.
The bench comprising Rachna Gupta and Hemambika Priya observed that in all the contracts entered into by the appellant with foreign universities, it is explicitly mentioned that the appellant is not an agent of such universities and there was a clear denial of agent-principal relationship. The bench further perused Rule 6A of the Service Tax Rules, 1994 and held that since the agreement is between the appellant/assessee and the foreign university, the place of provision is wrongly held to be in the taxable territory i.e India. Thus, it was held that foreign consultancy services provided by an assessee amounts to ‘Export of Service’ and they are outside the ambit of service tax.
Accordingly, it was held that the services provided by the appellant/assessee, falls within the ambit of Rule 3 of the Place of Provision Rules, 2012 and the department has wrongly invoked Rule 9 of Place of Provision Rules.
Sub-contractor Liable to Pay Service Tax Despite Main Contractor’s Payment: CESTAT
Lakshya Technocon Pvt. Ltd.,appellant-assessee, was registered for providing erection, commissioning, and installation services under the Finance Act, 1994. During an audit for December 2008 to March 2011, it was found that service tax of Rs. 35,27,972/- was unpaid on services provided as a sub-contractor. A show cause notice was issued in April 2014 to recover the tax with interest and penalties.
The two member bench comprising Binu Tamta(Judicial Member) and P.V.Subba Rao(Technical Member) heard both sides and found two key issues: whether the sub-contractor had to pay service tax when the main contractor already paid on the full contract, and whether the extended limitation period and penalties were justified.
The appellate tribunal referred to a Larger Bench decision in the Melange Developers case, which ruled that sub-contractors must pay service tax, and the main contractor can claim credit for it. So, the first issue was decided against the assessee.
CESTAT allows Duty Exemption on PCC Poles Stored Outside Factory and Broken Poles Failing Quality Tests
Rohini Udyog,appellant-assessee,manufactured PCC Poles and supplied them only to West Bengal State Electricity Distribution Company Limited (WBSEDCL). These poles were made by mixing sand, cement, and stone chips with MS rods as binding. During the audit, 650 poles made in September 2013 were found outside the factory due to lack of space.
The Tribunal heard the advocates and reviewed the records.It noted that pre-inspection was required by law to accept the goods. Broken poles were unusable and had no market value, so the appellant did not record them in the stock account.
The tribunal also found that the demand related to mismatched returns was barred by limitation because the appellant filed returns regularly and there was no suppression.
Denial of CENVAT Credit Based Solely on Uncorroborated Third-Party Statements: CESTAT Sets Aside Demand
M/s Hans Metals Ltd. vs Commissioner of Central Excise &CGST 2025 TAXSCAN (CESTAT) 576
Hans Metals Ltd.,appellant-assessee, manufactured and cleared iron and steel sections. It claimed Cenvat credit on inputs, capital goods, and services. One supplier, M/s Shiv Metalicks, Jamshedpur, was investigated by DGCEI officers. The investigation showed that Shiv Metalicks had issued fake invoices and passed incorrect Cenvat credit to the assessee. The supplier’s proprietor admitted this in his statement. Based on this, the authority confirmed the demand against the assessee.
A single member bench of P.K.Choudhary (Judicial Member) heard both sides and reviewed the records. It found that the entire proceeding was based only on statements from manufacturers and excise dealers, which were relied upon to conclude that the appellant had not received the goods. In a similar case, the tribunal noted that uncorroborated third-party statements could not be solely relied upon to hold against the appellant, especially when no cross-examination was allowed.
Limitation Period for Filing Appeal under Service Tax Counts From Actual Date of Service, Not Dispatch Date: CESTAT
M/s Ashwani Kumar Raja vs Commissioner, CGST & CentralExcise, Varanasi 2025 TAXSCAN (CESTAT) 577
The appellate tribunal observed that the address mentioned in the appeal form was “Bina Road, Auri, Anpara, Sonbhadra, Uttar Pradesh.” It also pointed out that the order was dispatched during the peak of the COVID-19 lockdown, when the Supreme Court had directed all forums to condone delays in filing appeals.
The bench held that this binding direction should have been considered by the Commissioner (Appeals) before dismissing the appeal as not maintainable. It further noted that no proof was provided regarding service of the speed-post.
The appellate tribunal referred to Central Board of Indirect Taxes and Customs (CBIC)’s instructions dated 16.03.2023, which clarified that for calculating the limitation period under Section 35(1) of the Central Excise Act, the relevant date is the date of service of the order, not the date of dispatch. It relied on a CESTAT decision that held the appeal period should be counted from the date the order was actually received, as shown by postal tracking records.
Consignment Note Mandatory for GTA Classification under Service Tax: CESTAT
Associated Soapstone Distributing Company Pvt. Ltd,appellant-assessee,had provided mining services to Gujarat Mineral Development Corporation (GMDC) under an agreement dated August 17, 2010. It was registered for service tax and had been paying tax on these services.
The two member bench comprising Dr.Rachna Gupta(Judicial Member) and P.V.Subba Rao(Technical Member) reviewed the submissions and records and noted that a consignment note was essential for a service to qualify as a GTA service. The show cause notice claimed that the appellant received GTA services, but no evidence was provided to show that RK Carriers had issued any consignment notes.
The appellate tribunal observed that neither the original order nor the appellate order addressed this issue. It noted that the agreement with RK Carriers only required submission of monthly bills, not consignment notes. The assessee counsel also confirmed that no consignment notes were issued.
CENVAT Credit on Interface Availed by Indian Oil u/r 16 is Valid, Not Subject to Credit Reversal: CESTAT
M/s Indian Oil Corporation Ltd. vs Commissioner of CentralExcise 2025 TAXSCAN (CESTAT) 579
Indian Oil Corporation Limited (IOCL), a leading manufacturer of petroleum products, uses a sequential method involving Motor Spirit (MS), High Speed Diesel Oil (HSD), and Superior Kerosene Oil (SKO) to cleanse their pipelines. During this process, a mixture called the interface forms, which contains residues of these products. This interface mixture is then sent back to the refinery along with the crude for reprocessing and extracting various petroleum products.
The division bench, consisting of S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member), heard the submissions from both sides and reviewed the facts.
Refund Appropriation Against CGST Arrears Without Hearing Violates Natural Justice: CESTAT Directs Fresh Adjudication
Degraphics Advertising And Marketing vs Commissioner of CentralExcise, Goods & Service Tax
Degraphics Advertising And Marketing,appellant-assessee,provided advertising agency services. The authorities found that the assessee earned commission by booking space in print and electronic media and selling it to clients. A Show Cause Notice dated 07.09.2018 demanded service tax of Rs. 1.06 crore with interest and penalty for 2012-13 to 2015-16. This demand was confirmed on 26.03.2021.
A single member bench P.Anjani Kumar (Technical Member) reviewed the case and the submissions. The assessee’s counsel argued that the authority did not follow the required procedure under Sections 78 and 79 of the CGST Act, 2017. They said no hearing was given before the order dated 09.09.2022 was passed. Also, the order dated 24.03.2022 was not properly served to the assessee. The assessee claimed the order was pre-planned since a letter dated 01.09.2022 warned that the refund would be appropriated.
Doctrine of Mutuality: CESTAT Quashes Service Tax Demand on Association Subscription Fees
M/s. Southern Region Bulk LPG Transport Owners Association vsCommissioner of GST and Central Excise 2025 TAXSCAN (CESTAT) 581
The assessee, Southern Region Bulk LPG Transport Owners Association, collected membership fees and donations during 2013-14. The revenue department demanded ₹8,15,236 as service tax, contending these receipts constituted taxable services under Section 65(105)(zzze) of the Finance Act, 1994.
Based on the submission made by both parties, the bench comprising Ajayan T.V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) inspected the legal backings and factual metrics of the case.
Relying on State of West Bengal v. Calcutta Club Ltd (2019), the bench upheld the doctrine of mutuality, holding that membership fees lacked taxable reciprocity. Donations were distinguished as voluntary contributions without service consideration. The demand under "Club or Association Services" was quashed.
CESTAT upheld the demand for service tax as it was non-payment of service tax on an act of suppression to evade payment of duty
The department received information with respect to M/s Fashion Suiting Pvt. Ltd., Bhilwara who are engaged in multi level marketing under the name Right Concept Marketing . The goods are marketed and sold by their dedicated network of distributors and the distributors at Multi Level Marketing. It starts with a person approaching M/s FSL and filling up a form for purchasing the product of a certain minimum value termed as “kit purchase”. This person filling up the form and buying their kit is a given a unique “Distributor Number‟.
A two member bench of Dr. Rachna Gupta, Member (Judicial) and P.V. Subba Rao, Member (Technical) found that the appellant has not provided any document to show that out of the alleged amount received by the appellant during the relevant period what amount has been received with respect to the commission received from M/s FSL on the products purchased by his sales group. On the contrary, when the M/s FSL was requested by adjudicating authorities below to quantify the demand it reported the distributor’s profit margin as “Nil”. The commission for sale or personal consumption was also reported as “Nil”.
Confirmation of Service Tax Higher than Proposed Demand in SCN is Not Valid: CESTAT
Anil Mittal vs Commissioner of Central Goods & Service Tax,Panchkula 2025 TAXSCAN (CESTAT) 583Anil Mittal, the appellant, is an advocate and is providing legal services and has been earning income from renting of residential property as well as renting of commercial property. The appellant has been discharging the service tax liability on the rent received from commercial property.
A single bench of S. S. Garg, Member (Judicial) found that the adjudicating authority has dropped the demand on professional income but confirmed the demand on rental income received from the residential property. It was viewed that once both the demands have been dropped, one by the adjudicating authority and another by the appellate authority, then confirming the demand on the basis of figures shown in the C.A certificate is not sustainable in law.
Penalty u/s 112(a)(ii) of Customs Act cannot be imposed on short paid duty: CESTAT
Section 112(a)(ii) of the Customs Act deals with penalty for improper importation of goods and provides that any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, shall be liable in the case of dutiable goods, other than prohibited goods, subject to the provisions of section 114A, to a penalty not exceeding 10% of the duty sought to be evaded or Rs. 5,000/-, whichever is higher.
A two-member bench, Justice Dilip Gupta, President and P.V. Subba Rao, Member (Technical) viewed that section 112(a)(ii) of the Customs Act stipulates imposition of penalty on the customs duty sought to be evaded and, therefore, presupposes a conscious exercise on the part of the person alleged to have committed evasion.
CESTAT sets aside Demand of Service Tax and Penalties as ST-3 returns Not Required in terms of S. 70 of Finance Act
M/s Balaji Travels, the appellant is registered with the service tax department for providing taxable services under the category of rent-a-cab operator services. In follow up of verification of third party data for the year 2015-2016, the appellant was called upon to submit documents like profit and loss account, balance sheet, ST-3 returns and the agreements with the service recipient etc. which were provided.
A single bench of Dr. Rachna Gupta, Member (Judicial) relied in the case of Zyeta Interiors Pvt. Ltd. wherein it was held that once the government received the entire amount of tax assessee cannot be called upon to make the payment, irrespective the payment was to be made fully under forward mechanism or RCM or was to be made partially under both the mechanisms.
Service Tax cannot be levied on Notional Interest calculated by Department on Interest Free Security Deposit: CESTAT
Between 2012 and 2015, the appellant Jyotsna Vaults charged its clients the agreed locker rent and collected refundable, interest-free security deposits. The Department issued multiple show-cause notices contending that, under Section 67 of the Finance Act, the taxable value of the service should include the “notional interest” the company could have earned on those deposits.
Writing for the two-member bench, Judicial Member Dr Rachna Gupta observed that Section 67 taxes only the amount actually charged for a service. Locker rent, not the security deposit, is the sole consideration for leasing the lockers. Citing Murli Realtors, the Bench noted there is “no provision in service-tax law for deeming notional interest on a security deposit as additional consideration.” In the absence of a specific statutory mandate and because the Department had not demonstrated that the deposit influenced the rent, the attempt to add hypothetical interest was unsustainable.
Relief for Yamaha: CESTAT Orders Full Interest on Erroneous NCCD Deposit Refund
India Yamaha Motor Private Limited, the appellant, is engaged in the manufacture of motorcycles and scooters. During the period from March 2016 to June 2017, the appellant inadvertently used Cenvat credit to discharge NCCD, which was later discovered to be impermissible under the amended proviso to Rule 3(4) of the Cenvat Credit Rules, 2004. Upon realizing the error, the appellant paid the NCCD again in cash on 30.07.2018 and subsequently filed a refund claim for the erroneously utilized Cenvat credit.
The single-member bench of Judicial Member P.K. Choudhary rejected the department’s argument and held that the amount in question was never payable in the first place. The tribunal observed that the doctrine of restitution applied squarely, as the government had retained the amount without lawful authority for an extended period. The tribunal explained that the denial of interest on the full refund amount was contrary to established legal principles, including the rulings in Pratibha Processors v. Union of India and Abhishek Fashions Pvt. Ltd. v. Union of India.
Win for Adyar Ananda Bhavan: CESTAT Rules "Heat Wave Frying System" Classifies as Other Machinery, Not Kitchen Machines
Commissioner of Customs vs M/s.Adyar Ananda Bhavan Sweets &Snacks 2025 TAXSCAN (CESTAT) 588
Adyar Ananda Bhavan imported a Heat Wave Frying System used for mass production of snacks and declared it under CTH 84388020. The customs authorities disputed the classification and reclassified it under CTH 84198120, demanding differential duty. The adjudicating authority concluded it was kitchen equipment due to its food-processing function and issued a demand.
The two-member bench comprising P. Dinesha ( Judicial Member ) and M. Ajit Kumar (Technical Member) observed that the product catalogue and import documents confirmed that the equipment was an automated fryer designed for industrial-scale production of snacks. The Order-in-Appeal had correctly referenced the literature, which made it clear that the machine was not intended for kitchen use but for large-scale commercial food processing.
The tribunal observed that CTH 84198110 specifically covers “fryers” and CTH 84198120 covers “other kitchen machines.” The tribunal found that neither of these was appropriate given the scale and industrial purpose of the equipment. Instead, CTH 84388020, which covers “other machinery,” was deemed accurate.
Relief for ITI Ltd: CESTAT Rules No Misdeclaration in Software Valuation for Telecom Imports
ITI Ltd., the respondent, had imported components for telecom systems, including parts of Mobile Switching Centres (MSC), Base Station Controllers (BSC), and Base Transceiver Stations (BTS), along with associated software, through Chennai Air Cargo Complex in 2004. The company filed Bills of Entry and declared the software value separately, claiming exemption from Basic Customs Duty under Notification No. 21/2002-Cus and a nil rate of duty on software under a separate entry for Information Technology Software.
The two-member bench comprising P. Dinesha ( Judicial Member ) and M. Ajit Kumar (Technical Member), after reviewing the records, observed that the DRI itself had acknowledged the error in duplication of software value and confirmed that the duty was correctly paid.
The tribunal found that the revenue had failed to mention this key correspondence in its appeal, which went to the root of the issue. The tribunal observed that the case did not involve suppression or misdeclaration, and the facts were distinguishable from the precedents relied on by the department.
Retrospective Amendments Inapplicable to Old Imports Where No Bond or Bank Guarantee was Executed: CESTAT
The appellants, LIMAK-SOMA JV, CSCHK-SOMA JV, Soma Enterprise Ltd., and CGGC-SOMA JV had imported machinery and equipment under fifteen Bills of Entry between 2005 and 2007 for projects financed by the Asian Development Bank and approved by the Government of India. These imports were cleared at a nil rate of duty under Notification No. 84/1997-Cus., which at the time of import did not impose any post-import conditions.
The two-member bench comprising Rajeev Tandon (Technical Member) and R. Muralidhar (Judicial Member) observed that the appellants had complied with the exemption conditions as they stood at the time of import. Since no bond or bank guarantee was executed, there was no binding post-import obligation that could be enforced. The tribunal observed that imposing retrospective conditions through later notifications could not create fresh liabilities for transactions that had concluded lawfully under earlier terms.
Design and Development Services to Foreign Clients Independently Qualify as Export, Not Intermediary: CESTAT
PDQ Asia, the appellant, is a Noida-based service provider engaged in rendering business support and design and development services to overseas clients, primarily in the United States. The dispute arose when the department classified the appellant’s services as intermediary in nature and issued a show cause notice demanding service tax for the financial years 2014-15 to 2016-17.
The two-member bench comprising Mr. P.K. Choudhary (Judicial Member) observed that the appellant was not an intermediary, as there was no facilitation or arrangement of supply between third parties. The tribunal observed that the appellant directly rendered services to foreign clients without any involvement of other entities, and the place of provision was outside India. Since all conditions under Rule 6A were fulfilled, the services qualified as export and were not taxable. The appeal was allowed with consequential relief.
No Blanket Exemption for SEZs: CESTAT Orders Refund Reassessment, Stresses Need for Proper Documentation
ATC Tires Pvt. Ltd., the appellant, is a unit operating within a Special Economic Zone (SEZ) engaged in the manufacture of tyres. For the period from October to December 2013, the appellant filed a refund claim of Rs. 2,83,80,722 under Service Tax Exemption Notification Nos. 40/2012-ST and 12/2013-ST, contending that the services in question were used for authorized operations within the SEZ.
The tribunal pointed out that exemptions, especially in fiscal statutes, must be proven strictly by the claimant. It cited judgments of the Supreme Court, including Dilip Kumar & Co. and Hari Chand Shri Gopal, explaining that the doctrine of substantial compliance cannot be stretched to cover habitual non-compliance or essential lapses.
In light of the detailed objections and the appellant’s claims of having now furnished the necessary documentation, the tribunal decided to set aside the impugned order. It remanded the case back to the original authority for de novo adjudication, with directions to consider the appellant’s submissions afresh, following principles of natural justice and completing the process within 90 days. The appeal was disposed of with the appellant being granted the right to consequential relief, if found eligible, under the law.
CESTAT Allows 100% CENVAT Credit to Rambagh Palace Hotel, Holds IHCL Services Were Management Consultancy
M/s. Rambagh Palace Hotel Pvt. Ltd vs Principal Commissioner ofCGST & Central Excise2025 TAXSCAN (CESTAT) 593
Rambagh Palace Hotel Pvt. Ltd appellant-assessee, was registered to provide several taxable services like Mandap Keeper, Internet Café, Outdoor Catering, Health Club, Dry Cleaning, Banking, Renting of Property, Business Auxiliary Services, Transport of Goods, and Tour Operator Services. The assessee claimed CENVAT credit on service tax paid for input services, including operation and management services from IHCL, Taj Mahal Hotel, Mumbai. The department found that the appellant did not follow Rule 6(3)(ii) of the Cenvat Credit Rules, 2004.
The appellate tribunal noted that this issue of claiming full Cenvat credit despite receiving several collaborative services in the hospitality industry had already been addressed by this Bench and other decisions. It was observed that Rule 6 of the Cenvat Credit Rules, 2004, did not apply to certain services, including Management Consultancy Service.
The decision was upheld by the Apex Court in Commissioner vs. Piem Hotels Limited (2019), which held that Management Consultancy Services received by a hotel company from IHCL could not be treated as Franchisee services, and the assessee was entitled to 100% Cenvat credit without restriction under Rule 6(3).
Service Tax Not Applicable on University’s Rental Income from Banks, Post Offices etc: CESTAT
M/s Barkatullah University vs Commissioner of CGST & CentralExcise 2025 TAXSCAN (CESTAT) 594Barkatullah University, appellant-assessee,was investigated by the DG GSTI, which found that it had not paid service tax on affiliation/inspection fees and rental income for the period from July 2012 to June 2017. The total taxable amount was ₹22.03 crore, and the service tax liability, including cess, was ₹2.89 crore.
The two member bench comprising Dr.Rachna Gupta(Judicial Member) and P.V. Subba Rao(Technical Member) observed that the service tax demand was on charges collected by the assessee for allowing banks, post offices, canteens, and similar facilities to use its buildings and auditoria.
The appellate tribunal noted that the Karnataka High Court had already held in the Rajiv Gandhi University case that such rental income was not taxable, and the Supreme Court had dismissed the Revenue’s appeal against that decision.
Relief for BMW India: CESTAT Rules Post-Clearance Fuel Adaptor Fitment Not Manufacturing, Quashes Excise Duty Demand
M/s. BMW India Private Ltd. vs Commissioner of GST & CentralExcise 2025 TAXSCAN (CESTAT) 595
BMW India Pvt. Ltd., the appellant, is engaged in the manufacture and clearance of cars from its Chennai plant. After clearance, the cars were moved to the Vehicle Distribution Centre (VDC), where fuel adaptors were fitted exclusively to diesel variants, as these were not included in the factory-supplied CKD kits.
The two-member bench comprising P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) observed that the show cause notice did not allege that the activity was incidental to manufacture and that the adjudicating authority had travelled beyond its scope in confirming the demand.
Amendment of Bill of Entry to Claim CVD Exemption After Five Years Not Allowed Without Reassessment: CESTAT Sets Aside Appellate Order
Commissioner of Customs (Port) vs M/s. Krish Fabrics India Pvt.Ltd. 2025 TAXSCAN (CESTAT) 596
In this case,Krish Fabrics India Pvt. Ltd.respondent-assessee,mported various types of fabric but did not claim CVD exemption under Notification No. 30/2004-CX dated 09.07.2004. Later, on 16.07.2021, the respondent requested amendment of the Bills of Entry under Section 149 of the Customs Act to claim the exemption.
The Bangalore Tribunal dismissed the appeal, stating the correction could not be treated as a clerical error under Sections 149 or 154. The appellant failed to claim the exemption at the time of assessment and tried to amend the Bill of Entry nearly six years later.
The tribunal held that amending a Bill of Entry to claim exemption required reassessment, not just correction. Since no clerical mistake was shown and the original assessment was based on the appellant’s declaration, the proper remedy was an appeal under Section 128.
Accrued CENVAT Credit is a Statutory Right and cannot be denied without Clear Legal Provision: CESTAT
Shri India Cotton Mills Pvt. Ltd. vs Commissioner of GST &Central Excise 2025 TAXSCAN (CESTAT) 597
Shri India Cotton Mills Pvt. Ltd., the appellant, is engaged in the manufacture of polyester yarn. The appellant opted for exemption under Notification No. 30/2004-CE from 13.03.2006 and subsequently filed a refund claim on 18.02.2014 for Rs. 29,51,234, representing unutilized CENVAT credit accumulated since July 2004, as reflected in their RG-23A registers and monthly ER-1 returns.
The single-member bench comprising M. Ajit Kumar (Technical Member) held that CENVAT credit is a benefit that once validly accrued becomes an indefeasible right, unless explicitly withdrawn by law. The tribunal relied on the Supreme Court’s rulings in Eicher Motors and Dai Ichi Karkaria, observing that any credit lawfully earned under the existing rules cannot be denied by subsequent rules unless there is clear retrospective intent expressed in the statute.
The tribunal ruled that the amended Rule 11(3) cannot operate retrospectively to deny credit earned before its insertion. It held that the revenue’s attempt to apply the rule to past credits was legally unsustainable and violative of the principle that vested rights cannot be taken away without explicit legislative intent.
Redemption Fine Not Justified on Re-Exported Goods Due to Supplier's Mistake: CESTAT
Durga Computers,appellant-assessee,filed a Bill of Entry on 04.05.2019 for importing Hynix 2GB DDR2 800 RAM. The goods were cleared on 07.05.2019. On 08.05.2019, Customs found that the RAM had different stickers reading “Hynix 2GB DDR2 PC2 6400U Korea.”
A single member bench of Anil G.Shakkarwar (Technical Member) reviewed the case and noted that the original authority recorded that the supplier had agreed to take back the goods. The goods were assessed through the Bill of Entry, and Customs had passed an out-of-charge order.
The appellate tribunal pointed out that the law on imposing a redemption fine on goods allowed to be re-exported was settled by earlier decisions, including one from this bench in Skylark Office Machines. That decision said if goods are allowed for re-export, no redemption fine can be imposed.
CESTAT Holds Construction Services for DDA Not Taxable Under CCIS as Projects Serve Public Purpose
M/s Vats Builders & Suppliers vs Principal Commissioner ofCentral 2025 TAXSCAN (CESTAT) 599
Vats Builders & Suppliers ,appellant-assessee, was registered for providing manpower recruitment, construction, and works contract services. Based on information received, the Service Tax Commissionerate, Delhi, initiated an investigation and found that the appellant-assessee had provided construction services to the DDA for Commonwealth Games 2010 projects but had not paid service tax on the payments received.
The two member bench comprising Binu Tamta (Judicial Member) and Hemambika R.Priya (Technical Member) heard both sides and considered whether the services provided to the DDA were taxable under the category of CCIS. As defined under Section 65(25b) of the Finance Act, CCIS covers construction and related services meant primarily for commercial or industrial use, excluding services related to roads, airports, railways, and similar public infrastructure.
EPCG Exemption for Sericulture Projects Does Not Waive Block-Wise Export Obligation, Only Average Export Requirement: CESTAT
M/s Kasare Vanya Silk Mills Pvt. Ltd vs The Commissioner,Customs 2025 TAXSCAN (CESTAT) 600
Kasare Vanya Silk Mills Pvt. Ltd., the appellant, set up a silk manufacturing unit in Raipur, Chhattisgarh, under a tripartite agreement with the Central Silk Board, the Ministry of Textiles, and the Government of Chhattisgarh. The company obtained an EPCG Authorization on December 9, 2011, allowing it to import capital goods at zero customs duty in exchange for an export commitment of six times the duty saved, split into two periods: 50 percent to be completed in the first four years and the remaining 50 percent in the next two years.
The two-member bench comprising Justice Dilip Gupta and Technical Member P.V. Subba Rao held that while the exemption under the EPCG notification removed the need to maintain average export performance, it did not remove the obligation to meet the specified export targets in each time block. The tribunal upheld the recovery of customs duty with 15 percent interest for failure to meet the obligation. It found no evidence of diversion of goods or deliberate suppression and set aside the related duty demand, penalties, and confiscation orders.
The appeal was partly allowed, clarifying that sericulture projects under the EPCG scheme are still required to fulfill export obligations within the specified periods to retain the benefit of duty exemptions.
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